News & Analysis

The euro has managed to drag itself slightly higher from yesterday’s lows, but equity markets were not significantly buoyed by the TLTRO news, possibly due to the limited macro impact of the measures compared to the ECB’s asset purchase program.

Sterling continues to gear up for a volatile session next week without any significant data releases this week. Market participants’ attention is firmly on the three major events, the first of which, the meaningful vote, took another blow overnight as scepticism on forthcoming concessions from the EU hit the daily newspapers.

The single currency couldn’t match the level of play from the Ajax vs Real Madrid game and ended up in the bottom half of the G10 currency pack, despite hopeful signs from the domestic demand side of the Eurozone economy. Both January Retail Sales and the February Final Services Purchasing Manager Index outstripped the forecasts, lending some tentative support to the thesis that consumers and domestic demand may take the ailing Eurozone economy by the hand.

GBP Sterling pared back some of its recent gains yesterday, especially against the US dollar. Brexit will once again be back in focus today as Attorney General Geoffrey Cox will head to Brussels with Brexit Secretary du jour Stephen Barclay in a last ditch attempt to...

Sterling starts the week on the front foot after Theresa May nips to the money tree that bought her a coalition government in an attempt to buy a Brexit deal. The £1.6bn “stronger towns” fund looks designed to swing Labour MP’s from Brexit support towns to vote for the current deal in next week’s second meaningful vote.

The GDP Price Index rebounded to a 1.7% quarterly, reversing the downward trend it had shown since the second quarter of the year. However, the real question may be whether this push will continue in the start of 2019, when the global slowdown and the longest-ever government shutdown might have filtered deeper into the economy. Meanwhile, the US dollar also received some support from Asian markets, where the stalled conversations between Donald Trump and North-Korean Kim Jong Un on denuclearisation, triggered some fears on Asian equities; a risk-off move that led to further haven flows into the dollar

Last night’s amendments saw May’s promises to host votes on a no-deal scenario and an extension in Article 50, should her second meaningful vote attempt fail, become legally binding. Meanwhile, Jeremy Corbyn announced Labour’s official stance to back a referendum should the meaningful vote fail.

Today, after Prime Ministerial questions at 12 p.m. the House of Commons vote on a whopping 12 backbench amendments, which include the original Cooper amendment that sought an extension in Article 50 and a fresh amendment by Spelman and Dromey which could give Parliament control a week after the meaningful vote deadline. This is what May tried to avoid, and with plenty of cross-party backing, could untangle much of May’s work yesterday.

This morning, sterling hit a fresh 4-week high after news broke that PM May will brief cabinet on an extension in Article 50 before addressing Parliament to outline the “progress” that has been made at mid-day. This could well see a vote in the House of Commons, should the next meaningful vote fail, to decide on an extension in Article 50 or a hard-Brexit scenario.